ETF Spotlight on SPDR Gold Shares (NYSEArca: GLD), part of an ongoing series. The gold exchange traded fund has surpassed SPDR S&P 500 ETF (NYSEArca: SPY) as the largest ETF by assets. GLD holds $76.7 billion, compared with $74.4 billion in SPY, according to sponsor State Street Global Advisors.

Objective: SPDR Gold Shares tries to reflect the movements in gold spot prices.

Holdings: According to the ETF’s prospectus, GLD holds gold bullion, which is kept in the form of London Good Delivery bars (400 oz.) and held by the custodian (HSBC Bank USA) in its London vaults. Some of the gold may also be held in the vaults of sub-custodians.

What You Should Know:

  • State Street Global Advisors is the provider of the fund.
  • GLD has an expense ratio of 0.40%.
  • The fund has gained 16.35% over the last month, 23.55% over the past three months, and 29.72% year-to-date. [ETFs that Short Gold See Volume Rise]
  • “If there is a worldwide recession and the global slowdown is real, then gold will go higher,” says Andrew Keene, an independent equity options trader.  “However, if the market can find some legs on Friday from Ben Bernanke and the GDP report, then gold might finally get hit hard. “
  • Gold has historically done well during times of financial and economic turmoil as investors seek out alternative stores of wealth and as a hedge against inflation. [Risk Off: Gold, Silver and Treasury ETFs Outperform]
  • “Gold is a limited commodity that retains purchasing power even under strong inflationary pressures,” according to Morningstar analyst Abraham Bailin. “On the other hand, increased dollar strength will detract from gold’s value as investors are able to buy more metal with each bill.”
  • “Commodities like gold are generally uncorrelated to the movements of stock and bond markets and so may serve as good portfolio-diversification tools,” Bailin added.

The Latest News:

  • GLD is now the largest ETF, reports Douglas Appell for Pensions & Investments. Jim Ross, senior managing director and global head of SPDR ETFs with SSgA, noted that investor demand for gold as a “portfolio diversifier and wealth preserver” has recently increased. [Gold ETFs Rise; Metal Nears $1,900 as Markets Await Bernanke]
  • “Gold has become the portfolio antidote for the global financial crisis,” commented James McDonald, chief investment strategist at Northern Trust Corp., according to Bloomberg.
  • “The dramatic surge in demand for gold reflects the aggregation of many investor preferences — for example, from those seeking shelter from lower stock markets to those protecting against currency debasement by central banks,” said Mohamed El-Erian, chief executive officer of Pimco, in the report.

For past stories in this series, visit our ETF Spotlight category.